The cheapest payroll software for a tiny business running standard W-2 payroll is Patriot Software. As of October 6, 2026, its Basic Payroll plan costs $17 per month plus $4 per employee. If your tiny business only pays independent contractors, Square Payroll is cheaper at $6 per contractor per month with no base subscription fee. However, before you can run payroll on any platform, you must have an Employer Identification Number and a separate business bank account.

Running payroll for a single employee feels like it should be simple. The reality is that the regulatory burden is exactly the same whether you employ one person or one hundred. You still have to register with the IRS. You still have to withhold taxes, file quarterly reports, and issue year-end documents. Doing this manually is a massive risk.

When a small business owner asks for the cheapest payroll software, they are usually trying to minimize the overhead of a mandatory administrative task. They just want a system that calculates the math, files the forms, and keeps them compliant without eating up their limited revenue. Patriot Software and SurePayroll frequently surface as top choices for micro businesses. Both aim to keep costs low and interfaces simple.

The Prerequisite Step: Establishing Your Business Entity

Running payroll is not just about choosing software. It is a legal function that requires a formal business structure. You cannot run payroll without an EIN. The IRS treats the employer as the entity, and getting an EIN is a strict requirement before you cut a paycheck. The IRS advises that opening a separate business checking account is a fundamental early step. If you have not separated your business and personal money yet, you need to fix your foundation before comparing payroll tools.

This is where an all-in-one platform is incredibly useful. ZenBusiness provides one place to set up and run the business, with payroll handled by a partner. You can manage your formation, secure your EIN, and handle bookkeeping all in one dashboard. When it is time to pay your employee, you can request a connection to ZenBusiness's ADP payroll partnership.

ADP handles the day-to-day payroll, tax filings, and management in its own system. ADP is a separate service with its own platform, its own billing, and its own support. It is not integrated into the ZenBusiness dashboard. An ADP representative will follow up to discuss your employee count and pay schedule. While ADP does not publish payroll pricing and quotes per business, ZenBusiness customers may be eligible for promotional pricing. Start here, get your legal entity formed, secure your EIN, and then evaluate your payroll software needs.

Comparing the Top Payroll Options for a Single Employee

The market for payroll software is crowded. When you are looking for the cheapest option for a tiny business, you need to evaluate exactly what you get for the monthly subscription fee. The list below covers the major options alphabetically, with prices as of October 6, 2026.

ADP is a legacy giant in the payroll space. ADP does not publish payroll pricing and quotes per business. This opacity can make it harder for a single-employee business to budget upfront. However, it scales massively if your business plans to grow rapidly beyond a single worker.

Gusto is often favored for its modern interface. Gusto prices its Simple plan at $49 per month plus $6 per person. The Plus plan is $80 per month plus $12 per person, and the Premium plan is $180 per month plus $22 per person. For a business with just one employee, the base fees on Gusto are significantly higher than the cheapest options on the market.

OnPay is a strong contender that includes robust HR features. OnPay charges $49 per month plus $6 per worker. The public page quotes a start price of $55 per month, which assumes a baseline of one worker. This single flat tier means you do not have to upgrade to higher plans to unlock basic features.

Patriot Software is a budget-friendly choice that separates tax filing responsibilities to save you money. Patriot Software charges $17 per month plus $4 per employee for Basic Payroll. Full Service is $37 per month plus $5 per employee. It strips away complex HR modules to focus entirely on affordable payroll processing.

QuickBooks Payroll is the default choice for businesses already heavily invested in Intuit software. QuickBooks Payroll bundles its services. Workforce Payroll plus Simple Start is $88 per month plus $6.50 per employee. The Essentials bundle is $125 per month plus $6.50 per employee, and Workforce Premium plus Plus is $203 per month plus $10 per employee. These are the ongoing rates, though they occasionally offer introductory discounts.

Square Payroll is the standout choice if you operate a retail business or only use contractors. Square Payroll costs $35 per month plus $6 per person. For businesses that only hire 1099 workers, they offer a contractor-only plan for $6 per contractor per month with no base subscription fee.

SurePayroll is designed specifically for small and micro businesses, including nannies and household staff. SurePayroll pricing starts at $29 per month plus $7 per worker. A multi-state add-on is available for $9.99 per month. If you are hiring domestic help, household payroll starts at $39 per month.

ZenBusiness is the optimal starting point before you even run your first payroll. ZenBusiness is a comprehensive platform for managing business formation and compliance. The Starter plan is $0 plus state fees. The Pro plan is $199 per year, and the Premium plan is $299 per year. The registered agent service is $199 per year. For ongoing accounting, Money Pro is $30 per month. A website is $129 per year. Pro and Premium renew at their annual prices. The EIN and operating agreement are included from Pro up and are $99 each on Starter.

Patriot Software vs SurePayroll: A Direct Comparison

When you narrow the field to just Patriot Software and SurePayroll, you are looking at two platforms that prioritize affordability for tiny businesses. Both are significantly cheaper than mid-market tools. However, they approach the job differently.

Patriot Software gives you the option to do some of the heavy lifting yourself. Its Basic Payroll plan is just $17 per month plus $4 per employee. This is the lowest ongoing base rate on this list for standard W-2 payroll. The tradeoff is that Basic Payroll requires you to handle your own tax deposits and file your own federal and state tax forms. If you miss a deadline, the penalties fall entirely on you.

If you want Patriot Software to automate those tax filings, you must upgrade to their Full Service tier. This bumps the cost to $37 per month plus $5 per employee. SurePayroll takes a different approach. It does not offer a self-service tax tier in the same way. Its primary small business plan starts at $29 per month plus $7 per worker, and this includes automated tax filings.

For a single employee, SurePayroll is cheaper than Patriot's Full Service tier, but more expensive than Patriot's Basic Payroll tier. SurePayroll also shines in specific niche scenarios. If your single employee lives in a different state than your business operates in, SurePayroll offers a multi-state add-on. If your employee is a domestic worker, SurePayroll has a dedicated household payroll product. Patriot Software is strictly focused on traditional commercial businesses.

Compliance: Forms and Federal Requirements

Hiring a single employee triggers a cascade of federal paperwork. The IRS and the Department of Labor mandate strict compliance from day one. You must gather the right forms before the employee begins work. All U.S. employers must properly complete Form I-9 for every individual they hire for employment in the United States. This form verifies their identity and legal authorization to work.

You must also ask all new employees to give you a signed Form W-4 when they start work. Make the form effective with the first wage payment. A W-4 remains in effect until the employee gives you a new one. Life events often prompt employees to adjust their withholding.

If a replacement is given, withholding begins no later than the start of the first payroll period ending on or after the 30th day from the date you received the replacement Form W-4. At the end of the year, you are responsible for issuing a W-2 to the employee and filing a copy with the government. You need the employee's name and SSN to enter on Form W-2. Without an accurate Social Security Number, your year-end reporting will be rejected.

Compliance: Employee Classification

A common mistake among tiny businesses is classifying a worker as an independent contractor to avoid payroll taxes and software subscription fees. This is a dangerous area of compliance. Classification turns on control, not on a label or a contract. The IRS weighs three categories: behavioural control, financial control, and the type of relationship.

There is no 'magic' or set number of factors that 'makes' the worker an employee or an independent contractor and no one factor stands alone in making this determination. You cannot simply write a contractor agreement and assume you are protected. Misclassification has a price.

An employer who classifies an employee as an independent contractor without reasonable basis may be held liable for employment taxes for that worker. If you are genuinely unsure about a worker's status, you can file Form SS-8 to ask the IRS to determine status. Be prepared to wait, as it may take at least six months to receive a determination on your filing.

Compliance: S Corporation Rules

Sometimes the single employee on the payroll is the owner of the business. If you have elected S corporation status, you are required to treat yourself as an employee. You cannot simply take owner draws to avoid paying payroll taxes.

S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made. The IRS closely monitors these structures for abuse. The IRS has the authority to reclassify payments made to shareholders from non-wage distributions to wages. If you are an S corp owner, choosing the right payroll software ensures you can automate these required wage payments and stay out of regulatory trouble.

Compliance: State Pay Frequency and Recordkeeping

Setting up your payroll software requires choosing a pay schedule. You do not have unlimited freedom in making this choice. Pay frequency is set by state law and varies widely. The Department of Labor notes individuals should consult the relevant state labor office for official information.

Some states require very frequent intervals. Connecticut requires weekly unless a longer interval is approved by the labor commissioner. California requires wages at least twice per calendar month on days designated in advance. Colorado requires monthly. You must configure your chosen software to comply with the strictest applicable rule.

You must also maintain detailed records of these payments. FLSA payroll records are kept three years. Furthermore, the records wage computations are based on, including time cards and wage rate tables, must be kept for two years. Your software should act as a reliable digital archive for this documentation.

Choosing Based on Your Needs

Choosing the cheapest payroll software depends entirely on your setup. If you only hire contractors, Square Payroll is unmatched because it drops the base fee entirely. If you want a traditional W-2 payroll service and are willing to handle your own tax deposits, Patriot Software Basic Payroll is the cheapest option. If you want the software to handle the tax filings for you, SurePayroll offers a very competitive entry point.

However, none of these tools matter if your business foundation is incomplete. The smartest first move for a new business is to consolidate the setup process. ZenBusiness handles the formation, secures the EIN, and sets up your recordkeeping. From there, requesting a quote from their ADP partnership ensures your payroll is handled by a dedicated industry leader. Secure your entity first, then pick the payroll schedule that fits your local laws.

Sources

This is general information rather than legal, tax or accounting advice, and requirements vary and change.